ITR Refunds Stalled: Why Thousands of Honest Taxpayers Are Suddenly Getting Scary IT Dept Emails

The Indian Income Tax Department is sending emails to many taxpayers, stalling their refunds. These alerts flag potential mismatches in tax claims, causing widespread anxiety.

Just when people were hoping for year-end relief, unexpected emails from the Income Tax Department have landed in thousands of inboxes across India. The messages are short, blunt and marked "do not reply". They warn of mismatches in income tax claims and for many taxpayers, they may explain why refunds have suddenly stopped moving.

While the department says the exercise is meant to improve compliance, the tone and timing of the alerts have left many people anxious and unsure about what to do next.

Who Is Receiving These Alerts?

So far, two groups appear to be most affected:

• Salaried employees whose deductions don't match what their employers reported in Form 16
• People who donated large sums to charities, especially contributions running into lakhs

Form 16 is the salary and tax statement submitted by employers. When figures in this document don't match the numbers entered while filing the return, the system is now flagging the case.

Why Your ITR May Be Put on Hold

The emails list several possible reasons for holding up return processing, including:

• Charity PAN numbers that don't match records
• Donations to trusts not registered under Section 80G
• Leave Travel Allowance or House Rent Allowance claims that look unusually high
• Capital gains that don't align with the Annual Information Statement (AIS) or Taxpayer Information Summary (TIS)
• Refund claims under the old tax regime that appear high compared to salary

The AIS and TIS are auto-generated from bank, employer and third-party transaction data.

Even Honest Donors Are Being Questioned

What's worrying many taxpayers is that several people with perfectly valid documents are also receiving these alerts. Many say they were flagged after donating to well-known charitable and spiritual organisations.

Under tax rules, only 50% of the qualifying donation is allowed as a deduction and that too within limits. Those who donated over Rs 2 lakh appear to be receiving a large number of these messages.

Adding to the confusion, these emails are not formal notices and do not appear on the income tax portal.

Refunds Delayed, Anxiety Rising

Chartered accountants say refunds are now getting delayed for months. Mohit Bang of Trivedi & Bang says the wording of the emails is part of the problem.

"Terms like 'false claims' are frightening people who have followed all the rules. Automated systems are sweeping up many genuine cases," he said.

Experts Say the System Needs Sensitivity

Ashish Karundia, founder of Ashish Karundia & Co, pointed out that the tax system already has strong checks. Charities must submit Form 10BD and issue donors Form 10BE, which are used while filing returns.

He also said mismatches in Form 16 often happen because employees submit investment proofs late and the law still allows them to claim genuine deductions later.

"These messages should guide taxpayers, not intimidate them," he said.